Patented technology profiles Net surfers

Online advertisers may have to tread carefully starting today, with the advent of a new patent for targeted Web ad technology.

Be Free today will announce the issuance of a patent covering automated profiling of Web users for targeted advertising. The patent is the latest in a string of recently granted e-commerce patents that promise to create either profits or problems for firms doing business online, as patent holders spar with potential infringers over the use of new but already common technologies.

Patent #5,848,396, "Computer Program Apparatus for Determining Behavioral Profiles of a Computer User," covers five steps in profiling users and serving them Web advertising:

 The automatic creation of user profiles, which include what sites users visit and what type of information they access;

 The delivery of that same type of data to users when they view banner ads or affiliate-site links and logos;

 The targeted selection of what products to advertise to various users based on the profiles;

 The ability to augment those profiles based on how users respond to the advertisements they are served;
 The ability to alter advertisements served to the user based on those augmented profiles.

Be Free, which collects the user behavior passively through cookies placed on users' hard drives, to date has about 20 million profiles in its database. Analysis and targeting technologies have yet to be rolled out and are scheduled for delivery next year.

The patent, however, was filed in April 1996, when e-commerce was in its infancy. Be Free is counting on that comparatively early date to shore up its patent against the inevitable claims of prior use that patents tend to attract. A patent is only valid if it is both novel and "not obvious"--evidence of an invention that existed prior to the patent application can be used to invalidate a pending patent.

Be Free's technology also distinguishes itself in how long it tracks users, according to company cofounder and executive vice president of business development Tom Gerace.

"Nobody does what we do end-to-end," Gerace said. "There are companies like Engage and DoubleClick, but they lose users when they pass them off to a retail site. We are optimizing the end-user experience, even when they get to the store."

Be Free's next step with its patent is to find where it is being infringed.

"We are in the process of looking at the industry and seeing who steps on what piece of the patent," Gerace said. "Our goal is to make sure that Be Free's clients have the best merchandising and other marketing methods online. We will leverage the patent to build strategic relationships with companies that may overlap."

Patent law and licensing isn't the only area of controversy for Be Free. Online privacy advocates raise their eyebrows at technologies that collect demographic, psychographic, and behvarioral data from Internet users. Conscious of this criticism, Be Free claims that it collects only "anonymous" information on people's surfing habits.

"We build anonymous profiles, and never match what we learn to a real-world person," Gerace said. "We've separated the process of identification from the process of recording and sorting through user information."

But privacy advocates question the true "anonymity" of such a system.

"The integrity of such a system is only as good as the legal protections available to the user," said David Sobel, lead counsel of the Electronic Privacy Information Center. "In other words, if this assurance of anonymity is contained in a privacy policy that is subject to change at any time, as many such policies are, then there is a real question as to how protective of privacy this system is."

From a privacy perspective, according to Sobel, the entire online profiling enterprise is suspect.

"I don't consider this kind of approach to be truly anonymous," he said. "In a truly anonymous business model, the object is to attract as many eyeballs as possible and, as a result of that traffic, generate advertising revenue. We're now clearly at the point where there are two competing models, an anonymous model where the emphasis is on creating the fewest possible obstacles and making the user feel as comfortable as possible, and then the other model, which is geared towards targeting users for marketing solicitations."